Chapter 04 · Sale
Canada-US Treaty Article XIII: Real Estate Capital Gains
How the Canada-US tax treaty Article XIII governs real estate capital gains taxation.
Direct answer · 60-second summary
The 60-second version
- Article XIII(1): each country taxes its property
- Florida gains = taxable US first
- Florida gains = taxable Canada after
- Foreign tax credit in Canada reduces double
- Article XIII(3): holding company rule
- TCP / FIRPTA block workarounds
- Canadian residents sell Florida = US + Canada
- FIRPTA withholding is foreign tax credit
Acronyms used in this guide
- Article XIII — Article XIII Canada-US treaty
- FIRPTA — Foreign Investment in Real Property Tax Act
- FTC — Foreign Tax Credit
- TCP — Taxable Canadian Property
- CRA — Canada Revenue Agency
- IRS — Internal Revenue Service
Article XIII(1): taxing rights
Each country retains right to tax gains from property situated on its soil. Florida real estate gains: US taxes first (FIRPTA 15%), Canada taxes after (50% inclusion + provincial rate).
Foreign tax credit to avoid double taxation
Canadian sellers pay US tax (FIRPTA withholding) then Canada tax. Foreign tax credit in Canada reduces Canada tax by US withholding, avoiding double taxation.
Article XIII(3): holding company rule
Corporation derives >50% value from real property in source country = source country can tax share sale. Prevents avoidance.
TCP vs. FIRPTA: two safeguards
Canada TCP (Taxable Canadian Property) = Canadian property taxable in Canada. US FIRPTA = US real property taxable in US. Two complementary rules prevent workarounds.
Every figure, rate, threshold, and deadline in this guide is drawn from a verifiable primary source listed at the bottom of the page. The article is updated whenever the underlying rules change, with a fresh review date stamped at the top.
Sources and references
Disclaimer
This guide is for educational purpose only.
For concrete decisions, consult a licensed attorney.